SOLUTION: How much would it cost to finance $400.00 over 20 years @ 3.25% interest? Thanks!

Question 1066264: How much would it cost to finance $400.00 over 20 years @ 3.25% interest?
Thanks!
Answer by swincher4391(1107) (Show Source): You can put this solution on YOUR website!
Your question is incomplete, but I will assume that you intend to make monthly payments and that the 3.25% is compounded monthly. If either of these assumptions are incorrect, shoot me an email @ swincher4391@yahoo.com.
Anyway, to answer your question:
We need to solve for our monthly payment. Let's call it P.
So, we have that A = P*(1-(1+r/n)^(-nt))/r, where A is our financing amount, P is our payment, r is our rate, n is the number of times compounded in a year, and t is the number of years we are financing over. Notice we have A = 400, r = .0325, n = 12, and t = 20.
So
Simplifying a bit we get that So P ~ $2.27 a month.

RELATED QUESTIONS
1. Wen Seng operates an ice cream shop. He is trying to decide whether to expand his... (answered by ikleyn)

how much would $400 be worth after 16 years if it were invested at 3% interest compounded (answered by Fombitz)

How much would $400 be worth after 16 years, if it were invested at 3% interest... (answered by nerdybill)

Five years ago, you bought a house for $151,000, with a down payment of $30,000, which... (answered by richard1234)

Suppose you want to have $400,000 for retirement in 20 years. Your account earns 4%... (answered by Solver92311)

Suppose you want to have $400,000 for retirement in 20 years. Your account earns 5%... (answered by Boreal)

Suppose you want to have $400,000 for retirement in 20 years. Your account earns 7%... (answered by Theo,ikleyn)

How much positive interest is accumulated when your have $5,000 and earn $400 over two... (answered by Alan3354)

Is it D? I want to check my answer. Bob has taken out a loan of $15,000 for a term of... (answered by Theo)